Committee forwards five-year, $75M AT&T telecommunications agreement to full Board with recommendations

The Budget and Finance Committee on Monday voted to forward to the full Board of Supervisors a proposed five-year, up-to-$75,000,000 telecommunications agreement with AT&T, while asking staff to amend and monitor several contract details.

John Walton of the Department of Technology told the committee the agreement consolidates roughly five separate city contracts under one enterprise agreement and leverages the state CalNet 2 contract to secure consistent terms and discounted rates. "This will be our amendment to a contract," Walton said, adding the consolidation creates "a single point where we can report back to you on spend on a regular basis."

Budget analyst Mr. Rose summarized the analysts' review and recommended clarifications. He said the $75 million not-to-exceed amount is based on past usage plus projected large telecommunications projects, and that using CalNet 2 avoids tariff pricing. "CalNet 2 average savings are about 65%," Rose said, adding the analysts estimated the equivalent tariff cost at about $214,000,000 — a difference of roughly $139,300,000.

Rose flagged two nonstandard contract provisions: AT&T is self-insured, which alters the city's standard insurance language, and the agreement lists a liability limitation that differs from city code (section 21.23). He also noted exhibit H currently allows external public agencies to access the city's preferred rates; the analysts recommended removing non-city agencies, and the department submitted an amendment to do so.

Supervisor David Campos said piggybacking on competitively bid state contracts can be appropriate but pressed staff on whether piggybacking would become the default approach. Christine Martin of the Department of Technology said each large contract is evaluated case-by-case and the department's "highest priority is obviously getting...the best bang for the buck." Campos expressed concern about limiting vendor liability; Martin replied that the approach is standard industry practice and that "AT and T is liable. We can sue AT and T for breach of contract, loss of use, loss of services."

Committee members also pressed the department for Local Business Enterprise (LBE) participation and monitoring. The analysts recommended requiring a written report on how LBEs were retained and the amounts allocated, to be provided one year before contract expiration; Rose also urged a board report one year before the contract end showing actual expenditures.

John Walton said a portion of the projected $75 million supports capital-style work — roughly $15,000,000 a year historically for installations tied to large projects — and that the contract also covers base operational costs and pilot projects (such as voice-over-IP and higher-speed connectivity to buildings).

No members of the public spoke on the item. The committee moved to accept the budget analyst recommendations and forward the ordinance to the full Board with a recommendation; the Chair noted items recommended out of committee would go to the Board the following Tuesday unless another date is indicated.

The full Board will consider the ordinance at its next meeting; the committee asked staff to amend the resolution for retroactivity to an effective date of March 1, 2010, clarify minimum tenant/LBE reporting language and remove or limit non-city participation in exhibit H.